David consumes only ice cream and Dr. Pepper. At his current consumption bundle hismarginal utility from a scoop of ice cream is 8 and his marginal utility from a can of Dr. Pepper is 4. The current price of a scoop of ice cream is 50 cents while the cost of a can ofDr. Pepper is 35 cents. Is David maximizing his utility

No.

Explanation:

David is maximizing his utility at a point where the marginal utility per dollar from a scoop of ice cream is equal to the marginal utility per dollar from a can of Dr. pepper.

Given that,

Marginal utility from a scoop of ice cream, MU_I = 8

Marginal utility from a can of Dr.Pepper, MU_D = 4

current price of a scoop of ice cream, P_I = 50 cents = 0.50

cost of a can of Dr. Pepper = 35 cents, P_D = 0.35

Therefore,

(MU_I) ÷ (P_I) = 8 ÷ 0.50

                      = 16

(MU_D) ÷ (P_D) = 4 ÷ 0.35

                          = 11.43

Hence, David is not maximizing his utility.

He can maximize his utility by consuming less ice cream and consuming more Dr.Pepper.

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